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Hungary’s Tax Cut to EU’s Lowest Seen Risking Race to the Bottom

Hungary’s plan to cut its corporate tax rate to the lowest in the European Union from next year may spark a “race to the bottom” as its ex-communist peers look for ways to compensate investors for rising wages, according to BMI Research, a unit of Fitch Group.

Wage pressures are set to intensify next year as central Europe combats a labor shortage while workers flock to higher-paying jobs in the continent’s west, according to an e-mailed report released by BMI on Monday. The car industry, which acts as the engine of economic growth in much of the region, is particularly affected, it said.